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Insight & Opinion

CBRE: Alternative investments in new markets attract new investment

Author: Gemma

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CBRE’s 2015 Investor Intention’s Survey has shown a shift in investment sentiment towards European commercial real estate, as more investors aim to diversify their investment strategy.

CBRE has reported that as prime yields continue to improve, investors have shifted their attention towards ‘alternative’ investments in 2015.

27% of respondents stated that they would actively pursue opportunities in the student property sector, 17% healthcare, 17% in leisure/entertainment and 15% in retirement living. Real estate debt may attract 32% of investors in 2015.

CBRE’s 2015 Investor Intention’s Survey

Traditional investments

According to the report, offices will remain the most sought after asset class throughout 2015, accounting for almost 50% of activity.

Due to the popularity of real estate – and potential capital growth offered by some asset classes – 91% of investors have cited ‘availability of assets’, ‘asset pricing’ or ‘competition from other investors’ as obstacles.

Jonathan Hull, Managing Director of EMEA Capital Markets at CBRE, commented:

“Investors are constantly having to evolve their investment strategies, in their pursuit of yield and returns, as demand for European commercial real estate shows no sign of abating. This diversification is leading investors into new markets and sector. However, there is still significant demand for core locations and assets, particularly from the growing influx of capital from outside the region.

“Interestingly, a large proportion of respondents stated their intention to increase their overall trading activity, across a broader spectrum of risk, this year. This movement up the risk curve should benefit a far wider range of markets and sectors across the region.”

Richard Barkham, Global Chief Economist at CBRE, added:

“Despite the fact that core real estate prices are now markedly higher across most of Europe than a few years ago, investors are still strongly attracted to the region. This is not surprising given the spread of property yields over government bond rates. When compared to other territories, Europe still appears to offer the best value.”

The UK was named the most attractive market for real estate investment in Europe by 31% of respondents. Germany and Spain shared second place with 15%. Click here to read the full report.

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